It is now time to review your SMSF clients who have LRBA arrangements with related parties.

The ATO in ATO ID 2014/39 and ATO ID 2014/40 outline their concerns where a related party acts as the lender in a LRBA arrangement on non commercial terms.

In certain circumstances the ATO’s view can result in the net income from the LRBA being taxed as non-arms length income at the top marginal rate.

What action should you take?   Review all LRBA arrangements involving related parties to ensure the loan arrangement is based on commercial arms length terms and consider amending where required.

As always we are here to assist with any questions.